And This Is How Delta Will Get Its CSeries Jets Without Paying a Massive Tariff

Boeing has lobbied the federal government hard to impose tariffs on Canada’s Bombardier and its CSeries jets. They’ve claimed Canadian government subsidies allow the planemaker to sell at artificially low prices.

The US government announced an intention to impose a 300% tariff. Delta, which has ordered 75 of the CSeries jets, has said they expect to take delivery of the planes and not to pay a tariff.


Swiss International Air Lines new Bombardier CSeries passenger jet on display at Singapore Airshow, Copyright: prestonia / 123RF Stock Photo

Earlier today the Wall Street Journal reported that Bombardier was nearing a joint venture with Airbus for its CSeries.

And the deal was indeed announced this evening.

Discussions began in August. Ultimately Airbus will own 50.01% of the partnership and offer procurement, sales, marketing, and customer support to the program. They aren’t putting up front cash on the table. Bombardier will own 31% and the Quebec government will own 19% of the deal.

  • The dilution of the Canadian government share helps with optics in trade disputes.

  • And they plan to build some of the planes in Mobile, Alabama. They believe aircraft assembled in the U.S. won’t be subject to a tariff plus they highlight they’ll be creating U.S. jobs.

There haven’t been any A319 sales since 2012. The CSeries presumably fills the small aircraft gap in the Airbus successful sales portfolio.

During the announcement call this evening the word Trump never came up, natch. However they’ll be discussing delaying delivery of Delta’s aircraft order to be able to manufacture the planes in Mobile, Alabama. And they expect to scale up the Mobile manufacturing line quickly.

Since they expect to sell far more aircraft as part of an Airbus project than as a standalone Bombardier plane, they think they’ll build more planes in Quebec too even as they build planes in the U.S.

It’s ironic of course that the administration’s trade policy is letting European aircraft manufacturer Airbus pick up this asset on the cheap.

(HT: @jonostrower)

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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Comments

  1. Funny how now Delta looks as subsidies as OK ! Even when they hurt the US. The clearly have little values. Delta is the most out-marketed airline. False perception on the admirations for their brand. They have very little to no values

  2. The sad thing is that Trump will, with some justification, be able to claim victory because of the assembly plant in Alabama. What he’s doing, of course, is making Americans poorer by his protectionism and this will only encourage him, and his economically illiterate followers, to believe that they are doing the right thing.

  3. So that tariff is going to result in quite a few second- and third-order effects that overall won’t benefit the average American consumer very much. I’m sure there will be some new hires in Mobile, but probably most of the assembly will be converted from current A320 series capacity. Meanwhile, manufacturer consolidation will continue apace. Expect Boeing to make a run at Embraer now…

  4. So the end result is that Boeing and the Trump Admin have pushed Bombardier into the arms of Boeing’s greatest competitor, pissed off Canadians to the point where they are having to spend to market what a good corporate citizen of Canada they are, and they lost the Canadian government order for F18s. Seems like some excellent work by all. But hey, they will get to pretend that there will be jobs created in the US (which will really just be moved from building different planes)

  5. These planes are the best to replace those lousy 50/70 seat RJs. I fly from an airport that all the airlines but Allegiant fly those tiny planes. I welcome a replacement that is cost effective and ends my flying tiny planes!

  6. Well this seems to be the worst possible and unforeseen outcome for Boeing. They lose the temporary virtual monopoly in the US. They bleed even more business to Bombardier now that Airbus is behind it. Meanwhile they piss off other countries that turn to Airbus instead.

  7. OMG it’s the stupidest thing I’ve ever seen 🙂 Boeing, you’re exploding the leg yourself, it’s too funny

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